Limited liability partnerships for BC law firms
The Benchers have passed rules that will allow BC lawyers and law corporations to participate in limited liability partnerships (LLPs). The new rules will take effect once the Partnership Amendment Act, 2004, SBC 2004, c. 38, including consequential amendments to the Legal Profession Act, come into force. Proclamation of this legislation is expected later this fall.
For more information on limited liability partnerships, see the Partnership Amendment Act, 2004, as well as sections 30, 83.1 and 84 of the Legal Profession Act and Rules 9-12 through 9-20 of the Law Society Rules.
A limited liability partnership structure shields an individual partner from personal liability for the debts of the partnership or for negligence and wrongdoing of other partners, except to the extent of the partner’s share in the partnership’s assets. Individual partners continue to incur personal liability for their own negligence or wrongful acts and those of the persons they directly supervise or control.
The new rules will require a law firm, before applying to register as a limited liability partnership under the Partnership Act, to apply for Law Society approval. For a firm to receive Law Society approval as a limited liability partnership, the Society must be satisfied that the intended name of the LLP is not contrary to Chapter 14, Rule 9 of the Professional Conduct Handbook (marketing provisions) and that all members of the partnership are members of the Society or a recognized legal profession in another jurisdiction. Application forms will be available on the Law Society website later this fall, in advance of the Partnership Amendment Act, 2004 coming into effect.
A law firm offering services as an LLP must ensure that all of its advertising indicates that it is offering legal services through a limited liability partnership. In accordance with requirements of the Partnership Act, the firm must also take reasonable steps to notify existing clients in writing that it has registered as an LLP and the resulting changes in the liability of the partners. To guide firms in meeting this disclosure requirement, the Law Society Rules set out a standard notification statement.
Likewise, a law firm that is registered as a limited liability partnership in another province must register in BC as an extraprovincial LLP and, in that case, take reasonable steps to notify each client of the firm in BC of the registration and any resulting change in the liability of the partners.
Every firm practising as an LLP will also be required to file with the Law Society a copy of its annual report and any amendments to its registration statement at the time it files these documents with the Corporate Registry under the Partnership Act.